Auras Technology (3324): UBS initiates Auras Technology at Buy as AI liquid-cooling expansion is expected to outweigh cold-plate pricing pressure.

Overview

UBS initiates coverage of Taiwan-based thermal-solutions supplier Auras Technology with a Buy rating and NT$1,380 price target. The report argues that rising AI-server power density will accelerate direct liquid cooling, allowing Auras to expand cold-plate, manifold and CDU sales despite risks of pricing pressure and cooling-architecture change.

Core views

UBS's central thesis is that Auras is becoming a rack-level liquid-cooling systems provider rather than solely an air-cooling-module manufacturer. The firm supplies manifolds and cold plates to a major US server brand and leading US cloud-service providers, while building CDU capability. UBS estimates liquid cooling represented 31% of Auras's 2025E sales and forecasts that share to reach 74% by 2030E. It expects liquid-cooling sales to grow at a 49% CAGR over 2025-30, broadly tracking a 51% CAGR for the addressable direct-liquid-cooling market. The report expects direct liquid cooling, particularly cold-plate cooling, to remain the dominant architecture. UBS views it as a practical, economic approach for both new data centers and retrofits because of thermal performance, scalability and lower initial capital expenditure relative to alternatives. It considers immersion cooling less likely to dominate near term because of certification limitations, retrofit costs and operational complexity. Higher accelerator power requirements and migration toward fully liquid-cooled racks should increase liquid-cooling content per rack, including cold plates for GPUs, CPUs, switch ASICs and peripheral components. UBS estimates the data-center DLC market for components and systems will reach US$31bn by 2030E. It forecasts Auras's blended DLC share at roughly 6-7%+, while cold-plate share rises from about 4% in 2025E to around 10-11% by 2030. Cold-plate TAM is estimated at US$8.9bn by 2030E; Auras's cold-plate sales are projected at US$309m in 2026E, US$500m in 2027E and NT$25.5bn (US$870m) by 2030. Manifold sales are projected to reach US$748m by 2030, with Auras maintaining above roughly 19-22% share after an estimated 27% rack-manifold share in 2025. The near-term earnings path reflects both strong demand and supply-chain constraints. UBS forecasts Q4 2025E revenue of NT$6.96bn, up 17% quarter on quarter and 69% year on year, but 7% below Visible Alpha consensus and below company guidance for 25% sequential growth, owing to rack-manifold delivery push-outs caused by quick-disconnect shortages. UBS nevertheless says orders remain intact, supported by GB300 NVL72 demand from Auras's main US server-brand customer and incremental cold-plate share gains at a top-five US CSP. Full-year 2025E revenue is forecast at NT$22.6bn, up 43% year on year, followed by NT$34.1bn in 2026E, up 51%, and NT$42.4bn in 2027E, up 24%. UBS expects the growth mix to shift materially in 2026E. Cold-plate sales are forecast to rise more than 400% year on year to NT$9.1bn, or 27% of sales, aided by a full year of GB300 exposure and AI ASIC demand. Manifold sales are also forecast at NT$9.1bn, up 81% year on year and representing 27% of sales. In-house MQDs, qualified during 2025, are expected to support manifold delivery and reduce dependence on outsourced QDs. CDU revenue begins from a low base but is expected to grow as products move from in-rack to higher-ASP in-row formats. The report addresses concerns that micro-channel lids could replace some cold-plate designs. UBS expects initial MCL adoption for an overclocked VR200 SKU by Q4 2025 and possible mainstream VR300 adoption in 2027. It argues that greater DLC penetration, higher cold-plate attach rates, more complex customized AI-ASIC modules, and manifold/CDU specification upgrades should offset the effect. Its analysis factors in price cuts for VR200 NVL144 and still shows only a 1% decline in blended cold-plate value per rack versus GB300 NVL72. UBS nevertheless identifies NVIDIA L10 compute/switch-tray standardization as the largest downside risk. Standardization and concentration of assembly could expose tray-component suppliers to roughly 50% ASP pressure as customization declines. UBS expects established suppliers with high-volume, leak-free manufacturing, precision machining, cleaning capability, and platform qualification history to defend share better than new entrants, though margins could be pressured. ODM vertical integration is an additional longer-term concern, as Hon Hai and Quanta develop qualified cold plates, CDUs, QDs and sidecar solutions. UBS values Auras at 20x 2027E P/E, producing a NT$1,380 target price. The multiple is in line with the 20x average NTM consensus P/E since Auras gained AI liquid-cooling exposure in 2023, but below the 35x peak in Q3 2024. UBS forecasts sales and EPS CAGRs of 25% and 34%, respectively, through 2030E, and considers the shares' 17x/13x UBS 2026E/2027E P/E undemanding. Its base case assumes 51% and 24% sales growth in 2026E and 2027E and gross margins of 30.0% and 30.4%. The upside case of NT$1,775 assumes reduced pricing pressure, stronger CSP AI-computing wins and faster next-generation-platform qualification; the downside case of NT$710 assumes worse commoditization and broader MCL adoption.

Analysis framework

UBS combines a bottom-up estimate of direct-liquid-cooling component demand and Auras's market share with product-mix, customer-platform and financial forecasts. It tests the thesis through base, upside and downside scenarios, compares valuation with liquid-cooling history and peers, and applies a 2027E P/E multiple to derive the target price.

Methodology notes

• Industry AnalysisSupply-demand framework

  Bottom-up total-addressable-market and market-share analysis for data-center direct liquid cooling.

  UBS estimates the size and growth of the DLC market, then applies expected Auras shares across cold plates, manifolds and CDUs to forecast sales.

• Industry AnalysisVolume-price decomposition

  Cold-plate content and pricing per rack, attach-rate and volume analysis.

  The report assesses how more liquid-cooled components per rack can offset potential ASP reductions from platform standardization.

• Valuation methodsP/E and PEG Valuation

  2027E price-to-earnings multiple valuation.

  UBS applies 20x 2027E P/E to its earnings forecast, referencing Auras's post-AI-liquid-cooling valuation history and peer context.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Auras Technology (3324.TWO)

  Primary covered company and expected beneficiary of AI-server direct-liquid-cooling adoption.

  Strengths

  Established manifold presence, growing cold-plate exposure, major US server-brand and CSP relationships, and manufacturing/qualification capability.

  Weaknesses

  Late entry to the GB200 cold-plate approved-vendor list and CDU business starting from a low base.

  Comparison

  UBS says Auras trades at a discount to thermal peers and below its post-2023 liquid-cooling average valuation.

  Risks

  Cold-plate ASP pressure, MCL adoption, ODM vertical integration, QD shortages, raw-material volatility and hyperscaler-demand fluctuations.

Key data

• 12-month price targetNT$1,380Buy initiation; based on 20x 2027E P/E.
• Current priceNT$890.00As of 04 Dec 2025.
• DLC market TAMUS$31bn by 2030EUBS forecasts a 51% CAGR for components and system-level DLC.
• Liquid-cooling sales mix31% in 2025E; 74% by 2030EUBS's expected transformation of Auras's revenue mix.
• 2026E revenueNT$34.1bnUp 51% year on year in UBS estimates.
• 2027E revenueNT$42.4bnUp 24% year on year in the base case.
• 2026E cold-plate salesNT$9.1bnMore than 400% year-on-year growth; 27% of total sales.
• Base/upside/downside price casesNT$1,380 / NT$1,775 / NT$710Base, upside and downside scenarios, respectively.

Impact & implications

UBS argues that higher AI-server thermal requirements can support Auras's transition toward a larger, faster-growing liquid-cooling revenue base. The investment case depends on its ability to convert platform qualifications and market-share gains into cold-plate, manifold and CDU growth quickly enough to offset ASP pressure, component shortages and potential supplier disintermediation.

Risks

• Liquid-cooling adoption in AI servers could be slower than UBS expects, constraining core-business growth.
• Cold-plate standardization and commoditization could intensify price competition and pressure ASPs and margins.
• Broader or faster-than-expected MCL adoption could reduce cold-plate TAM.
• Copper and aluminum cost volatility could affect margins.
• AI and general-server demand from key US hyperscaler customers could fluctuate.
• ODM vertical integration by firms such as Hon Hai and Quanta could disrupt the traditional thermal supply chain over time.

What to watch

• Q4 2025 revenue delivery versus the NT$6.96bn UBS estimate and the effect of QD shortages on manifold shipments.
• The timing and scale of MCL adoption, initially expected for an overclocked VR200 SKU by Q4 2025 and potentially mainstream VR300 adoption in 2027.
• Cold-plate share gains on GB300 platforms and the pace of AI-ASIC project contributions from late Q4 2025E.
• Progress in in-house MQD deployment and CDU ramp-up.
• Evidence of NVIDIA L10 standardization, component pricing pressure and ODM expansion into thermal components.